China and the World of Business • China Business and the World

Sony’s Master of the Playstation is increasingly powerful at the House that Morita Built. He calls the company’s technology as its weakness. The streets of Beijing suggest that relevance will be Sony’s greatest challenge.

Today’s Wall Street Journal includes a great article about Sony’s attempt to save itself from the ignominy of commoditization . By appointing Ken Kutaragi of Playstation fame to head Sony Electronics, which makes up 70% of the Japanese giant’s business, the company’s leadership is making a move that will likely lead to the complete restructuring of the company.

Kutaragi correctly notes that at the core of the problem is the company’s need to regain its technology leadership.

But walking the streets here in Beijing and hearing the feedback from locals, there seems to be no question about Sony’s ownership of the technological high ground. But challengers are beginning to eat into that perception. PlayStations are under assault by Microsoft as the software giant invests more in marketing XBOX than Sony spends in all of its divisions in the PRC. Consumer electronics are being hammered by Samsung and LG who are focused far less on unique technology and far more on delighting customers with a vast variety of tightly targeted products. And in mobile phones, probably the single hottest part of the electronics market, more Sony-Ericsson phones are visible, but it is so far behind Motorola, Nokia, and Samsung that even local Chinese upstarts are beating Sony.

Really, for China the answer lies not in the technology, but in demonstrating that the products Sony brings to the market are far cooler, sexier, and more relevant than what rivals are delivering. Readers of this blog know I find “brand” an overused catchall excuse. Sony’s problem is not their brand – it’s the relevance of the company and its products to the Chinese.

Great technology and a powerful brand are terrific. But consumers can be wowed by both and still take a pass on your products. If Sony does not clearly demonstrate where their products fit in the Chinese home or business, they will find their vision of a digital future eclipsed by those being expounded by both foreign and local industry players.